NVIDIA (NSDQ:NVDA) will be reporting its second quarter fiscal 2017 earnings on August 11th, 2016 after markets close. Analyst consensus estimates are at 0.$37 earnings per share with revenues coming in at $1.35 billion. NVIDIA reported $1.153 billion in revenues during the second quarter of 2015, so the market is expecting the semiconductor company to report a 17% revenue growth, 4% more than the growth they achieved during the first quarter of this year.

During the first quarter earnings call, the company said that it is expecting $1.35 billion in revenues, plus or minus 2%, in line with what the analysts are estimating for the quarter as well. NVIDIA’s GPU business grew 15% and the Tegra processor business was up 10%.

The GPU Bid

During the first quarter, gaming revenue was up 17% year over year, reaching $687 million, accounting for nearly 60% of the company’s revenue; and as such, it will be crucial for the company to match or exceed that performance in Q2. With the gaming market growing steadily, and considering NVIDIA’s lead in this segment and the launch of Pascal GPUs, these factors should help the company maintain its momentum in this segment. And if this segment keeps its growth intact, it will make sure NVIDIA’s stock keeps moving up as well.

“Let's start out with our gaming platform. Gaming revenue increased 17% year on year to $687 million, momentum carried forward from the holiday season helped by the continued strength of Maxwell-based GTX processors. Last weekend at DreamHack Austin, we unveiled GeForce GTX 1080 and GTX 1070, our first Pascal GPUs for gamers. They represent a quantum leap for gaming and immersive VR experiences, delivering the biggest performance games from the previous generation architect in a decade. Media reports and gamers have been unanimously enthusiastic.”

NVIDIA’s New Growth Drivers

The other business platform that can surprise us is their datacenter business, which grew 63% year over year during the first three months of this fiscal compared to a year earlier. Though at $143 million in quarterly revenues, the datacenter group’s contribution to overall numbers is small, NVIDIA only needs a few million dollars’ growth to spring a surprise.

NVIDIA has achieved slow and steady growth over the last ten years, and the trend should continue this year as well. With the company trouncing its competition on several fronts, and multiple product launches this year, the growth of their futuristic datacenter and automotive business should fuel the company’s growth during the second quarter as well.

What Will Fuel Q2 Results - and Beyond?

If you are an investor, keep a close eye on how the company’s datacenter and automotive businesses are doing. As of now, these are the two revenue drivers that can take the company to a whole new level. The growth of cloud computing and use of artificial intelligence is on the rise, and the computational performance requirement is extremely high for such systems, making GPU performance a mission-critical component of their operations. NVIDIA’s GPU’s already power some of the world’s cutting edge AI platforms such as IBM Watson and Facebook’s Big Sur, so it is still a growing business segment that can be admirably augmented by growth in data center and automobiles.

With analyst estimates in line with the company's own expectations, the market is obviously not expecting any major surprises from NVIDIA during the second quarter, and neither am I.

NVIDIA Stock Articles & Video

Nvidia stock has been on a tear in 2016, up nearly 170% for the year. The rally in NVDA stock was interrupted by an abrupt pullback, triggered by Amazon's comments at its recent AWS conference. Should investors buy into this rare dip in Nvidia stock price?

After reporting much better than expected results for its last quarter, NVIDIA is not slowing down. NVIDIA has continued to build new markets, signing new collaborations with Microsoft and IBM. Although NVDA stock is already up 182% year-to-date, it still has room to climb.

Nvidia has sustained a record run, and has remained the best performing semiconductor stock for 2016. Upon exploring downside scenarios, I still walk away with the impression that the recent pattern of earnings beats will continue. However, the quarterly volatility will become more severe, as expectations are elevated and may eventually depart from reality.

AMD stock spiked by a massive ~9% yesterday to touch new six year highs. The stock is up on rumors of a licensing deal with Intel, that could edge out Nvidia. Do these rumors hold any water? And if yes, how big will the impact be on AMD?

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Comments on this article and NVDA stock

If you read into the article, you'll see that the data center segment of NVIDIA's business is only just catching up to the growth in cloud - and, thereby, data centers. As such, yes, they are indeed a new growth driver for NVIDIA, whose bread and butter is basically gaming until now.

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